Notes Payable refers to a written promise made by a borrower to pay a specific amount of money to a lender at a future date. This financial obligation typically includes interest and is often used by businesses to secure short-term financing for operations or purchases. When a company issues a note payable, it records the liability on its balance sheet, reflecting the amount owed. The terms of the note, including the interest rate and repayment schedule, are outlined in the agreement, ensuring both parties understand their responsibilities.